US embassy cable - 05ASUNCION1400

UNCLAS SECTION 01 OF 03 ASUNCION 001400 
 
SIPDIS 
 
STATE FOR WHA/BSC 
DEPT PASS TO USAID LAC/AA 
NSC FOR SUE CRONIN 
SOUTHCOM FOR POLAD 
 
E.O. 12958: N/A 
TAGS: PGOV, KCOR, ECON, PINR, PA 
SUBJECT: PARAGUAY: SURVEY RESULTS SEND MIXED MESSAGE ON 
CORRUPTION 
 
1. SUMMARY:  The results of three recent polls send a mixed 
message on corruption in Paraguay.  In mid-October, 
Transparency International's Corruption Perceptions Index 
showed Paraguay improved but still placed 144 out of the 159 
countries surveyed. Separately, in late September 2005, a 
survey by Paraguay's Steering Committee for a National System 
of Integrity (CISNI) indicated that large-scale corruption 
remains a serious problem and the GOP is doing too little to 
combat it.  Government officials reacted strongly to both 
surveys, claiming poor methodology and inaccuracy. Meanwhile, 
Paraguay's performance in a World Bank Institute Survey and 
the Millennium Challenge Corporation's control of corruption 
indicator reflected significant improvements.  Both time and 
sustained performance are required to significantly improve 
perceptions on corruption. END SUMMARY. 
 
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Transparency Poll Indicates Improvement in Fighting Corruption 
--------------------------------------------- ---- 
 
2. In October, Transparency International (TI) released the 
results of its annual corruption perceptions index (CPI), 
where in 2005 Paraguay places 144 out of the 159 countries 
included in the survey with a CPI score of 2.1 out of ten 
total points.  Paraguay tied with the Democratic Republic of 
Congo, Kenya, Pakistan, Somalia, Sudan, and Tajikistan and 
ranked just ahead of Angola, Equatorial Guinea, Nigeria, and 
Haiti.  According to the poll, Paraguay's record in combating 
corruption has risen in the last two years, signaling some 
improvement during Duarte's presidency. However, the rate of 
improvement has slowed in 2005.  Last year, Paraguay scored 
1.9 out of ten total points and in 2003 received a CPI score 
of 1.6. 
 
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While CISNI Survey Reflects Serious Concerns about Corruption 
--------------------------------------------- ------ 
 
3. In a separate poll released in late September 2005, the 
Steering Committee for a National System of Integrity (CISNI) 
published results that paint a rather negative picture with 
regard to the public's perception of corruption in Paraguay: 
 
-- almost half (47 percent) of those polled believe that 
large-scale corruption (including political party and 
governmental corruption and the payment of large bribes) has 
increased since last year (21 percent believe the levels of 
corruption are the same as in 2004); 
 
-- political parties in Paraguay are perceived to be the most 
corrupt public institution, followed closely by the Customs 
Directorate, the Paraguayan Congress, and the Supreme Court. 
 
-- 23.6 percent of those polled reported that they perceived 
the Customs Directorate as the most corrupt Central 
Government institution in the country.  Over 67 percent of 
those interviewed admitted that a member of the Customs 
Directorate had solicited them for a bribe within the past 
year; 
 
-- more than 80 percent acknowledged that with a bribe, they 
knew they would receive better customer service at public 
institutions, such as Customs; 
 
-- over 58 percent of the respondents believe that crimes of 
corruption will continue to grow in the future; 
 
-- 74 percent of those polled who had experienced corruption 
decided not to report it; of those deciding not to report the 
corruption, 56 percent said that the reason was because no 
investigation or punishment would occur; 
 
-- reflecting progress in 2005, 15 percent more people 
admitted to knowing how to report corrupt acts than those 
polled in the same 1999 survey; 
 
-- 80 percent of business owners polled believe that 
corruption is the primary obstacle to economic growth and 
development in Paraguay. 
 
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Reactions to Polls 
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4. In statements to the press, the head of Transparency 
Paraguay, Pilar Calizo noted that political will to fight 
corruption and impunity is lacking in Paraguay.  Several 
prominent Senators, however, were very critical of the TI 
poll.  During a public briefing with a U.S. expert on money 
laundering, Sen. Espinola, the leader of the Liberal Party's 
bench in the Senate, took the opportunity to discuss the poll 
and reject its findings.  Paraguay is no more corrupt than 
neighbors Argentina and Brazil, he said.  Rather, it is 
weaker politically, making it an easy target for unfounded 
claims.  Sen. Pedrozo, the Colorado President of the Finance 
Committee, similarly challenged the TI poll, blaming the 
U.S., among others, for reinforcing Paraguay's image as a den 
of corruption.  Clearly, both Senators felt defensive about 
the poll's findings and responded by attacking its 
legitimacy. 
 
5. Mercedes Argana, Executive Director of CISNI, told POLOFF 
that many within the GOP reacted strongly to the survey's 
results by questioning the methodology of the polling.  The 
Customs Directorate filed a complaint with CISNI stating that 
the survey misrepresented their organization, and indicated 
that the survey did not take into account the results of many 
changes within the Directorate in the past few months. 
According to Argana, members of the Supreme Court disputed 
their ranking as a highly corrupt organization, stating that 
many Paraguayans cannot differentiate between the Supreme 
Court and other judicial offices, and pointed out that many 
may confuse slow judicial proceedings with corruption. 
However, CISNI also received compliments on its survey from 
the academic community that noted the need for increased 
academic studies on the effects of corruption and the 
mechanisms needed to combat it.  University officials also 
acknowledged to Argana that a disconnect existed between 
local academic institutions, corruption research and current 
events in Paraguay. 
 
7. Note:  CISNI is a public-private partnership organization. 
 Its board members include members of the Duarte 
Administration, including the Ministry of Foreign Affairs, as 
well as the private sector and several Non-Governmental 
Organizations.  The study was funded by a grant from the 
Inter-American Development Bank and with technical assistance 
from the World Bank Institute (WBI).  The GOP Census Office 
conducted the poll from November 2004- January 2005.   The 
survey included interviews with 2,810 people, of whom 1,559 
are users of public services, 986 are workers within the 
public sector and 265 are business owners in Paraguay.  The 
margin of error for the survey is 2 percent with 95 percent 
confidence. This is the second time this survey was 
completed; the first survey was completed in 1999.  END NOTE. 
 
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Changing Attitudes Will Require Time and Sustained Performance 
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8.  Corruption has long been an endemic problem in Paraguay. 
As such, changing the public's perception of the government's 
commitment will require time and a record of sustained 
performance.  It is worth noting that Paraguay was one of 
only four countries in Latin America and the Caribbean to 
improve in all four WBI governance indicators, including 
control of corruption, comparing 2004 to 2002.  The 
Millennium Challenge Corporation (MCC) corruption control of 
corruption indicator similarly showed that Paraguay had 
improved from the 8th percentile (2004) to the 29th 
percentile (2005).  Notwithstanding the political constraints 
within which the administration has to operate, the following 
initiatives reflect an effort to advance reform (Note:  The 
success of several of these initiatives will ride on 
effective implementation and sustained political will which 
is often a sticking point. End Note.): 
 
-- an increase in tax and customs revenue; 
 
-- the announcement of a new tax regime to encourage 
formalization of the economy in Ciudad del Este; 
 
-- plans to implement a whistleblower program in the Finance 
Ministry and in the Supreme Court; 
 
-- implementation of a reform of the selection process for 
judges, prosecutors, and public defenders by the Judicial 
Council; 
 
-- a confrontation of illegal deforestation, undocumented 
persons and machinery, and the illegal export of logging 
along the Paraguayan/Brazilian border, known as Operation 
Sovereignty; 
 
-- a Millennium Challenge Account Threshold Country Plan that 
proposes far reaching and politically difficult 
anti-corruption reforms. 
 
9.  Comment: Clearly the GOP has a long way to go towards 
changing the public's perception of its commitment to combat 
corruption.  The TI survey reflects a positive trend -- 
albeit from a low baseline; the CISNI survey raises serious 
questions whether the public believes the government is 
committed and/or capable of producing a positive improvement. 
 Part of the problem lies with the political establishment, 
which benefits from the current corrupt system of spoils and 
casts blame at the surveys for Paraguay's poor rating.  The 
WBI Survey and MCC reflect progress over the course of the 
Duarte administration.  Some noteworthy initiatives have been 
undertaken; others are under consideration.  Nevertheless, it 
is hard to overestimate the ability of corrupt individuals to 
find ways around reform efforts.  Ultimately the crux of 
changing attitudes and performance will come down to ending 
the culture of impunity that prevails for those in power who 
break rules.  Even with determined and effective political 
leadership, such cultural change is certain to be a long-term 
endeavor.  End Comment. 
JOHNSON